Trident Food Corporation generated the following income statement for the most recent fiscal year:
Sales revenues $150,000
Variable cost of sales (112,500)
Gross profit 37,500
Fixed operating costs (24,000)
Net operating income (EBIT) 13,500
Interest (10,000)
Earnings before taxes 3,500
Taxes (40%) (1,400)
Net income 2,100
Which of the following is the degree of total leverage for Trident Foods?
?
A. ?42.86×
B. ?10.71×
C. ?71.43×
D. ?17.86×
E. ?6.43×
Answer: B
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